January Reverse Mortgage Volume Powered by 39% Wholesale Growth

Total reverse mortgage endorsements grew 19.7% in January compared to the previous month, an increase powered mostly by wholesale volume growth, according to the latest data from Reverse Market Insight.

Home Equity Conversion Mortgage (HECM) wholesale volume was up 39% in January, while retail endorsements grew 7.5% from December. 

“We wrote in a previous report of our surprise at January’s 19.7% increase in HECM endorsements, now we know that it was primarily wholesale channel loans powering that surge,” noted RMI in its January HECM Originators report. 

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January’s wholesale growth could be due, in part, to brokers being quick to take advantage of marketing opportunities in response to the recent HECM program changes like PLF reductions and utilization restrictions, said RMI President John Lunde in an email to RMD.

“They likely had a disproportionate share of volume in case numbers ahead of the 9/30 cutoff, which led to more fundings in Q4 and now more endorsements in January,” Lunde said.

January also exhibited considerable activity among the top 10 lenders.

Security One/RMS jumped 43.7% to 1,145 loans during the month, which RMI noted as the first time since August where any lender has posted more than 1,000 loans. 

Urban Financial also saw considerable growth in its retail and wholesale volume channels for the month, rising 70% in January for its highest monthly total since July. 

Generation nearly doubled its volume, which grew 97.4% during the month—also its highest since July. 

The RMI HECM Originators report also ranks the top 100 HECM lenders by volume channel for the last 12 months through January 2014. 

See where the competition ranks.

Written by Jason Oliva

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  • The 19.8% growth is only month over month. When comparing January 2014 to January 2013, we find a decline of almost 2.5%.

    There is little doubt that the increased month over month endorsement volume can be found in the pull forward effect of case number assignments occurring before September 29 due to elimination of all HECM Standards on that date. However, that also demonstrates that the four month lag assumption is still more accurate than the recent two month lag assumption.

    It is odd that John is attributing the increased volume to case number assignments that occurred four months ago since he is one of the biggest proponents of the two month lag assumption. John is trying to have it both ways, i.e., the two month lag rule when that fits his reasoning in one month and the four month lag rule when it does not.

    The lag rule is how long does it take for the average HECM application with a case number assigned which closes to go from case number assignment to endorsement. The old industry rule of thumb has been four months. The new position of several well known industry leaders is that the lag is now two months. While there will be adjustments from time to time to any rule of thumb, one must dismiss any explanation that is based on using one rule when it fits the rational being presented and the other rule when it does not. There are many times where HECMs are endorsed withing two months of having a case number assigned and others where it is closer to six months but it is rare to see either one month lags or seven month lags. Usually by the fourth month following case number assignment, most HECMs for any particular month have for the first time been endorsed. Expect to see the lag times drop as HUD takes measures to modernize its endorsement process and also due to even smaller monthly volume.

    The important part of the stats for the month, however, is that on a January to January basis, we are trending down even though on a month to month basis, we are trending up, way up. Further new case number assignments are not supporting a rosy endorsement picture for March and early spring.

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